Industrial policy report likely to echo Culliton

THE Enterprise Strategy Group report on Irish economic development for the next decade, due to be released today, is expected to pick up where the Industrial Policy Review Group’s 1992 Culliton Report left off, according to analysts.

The 1992 report stressed the need for this economy to grasp the emerging technologies of the day and highlighted the need for a far greater focus on research and development (R&D).

It recommended the State sector (which included the Trade Board at the time) and IDA Ireland be streamlined to give far greater focus to those issues.

In the end IDA Ireland was set up to focus on foreign direct investment.

On the domestic front, Forbairt was formed and Eolas, the state science authority, was merged with it.

The Trade Board was also integrated with Forbairt, now Enterprise Ireland, to give far greater cohesion to the support and development of indigenous industry, as Culliton suggested.

In the case of new technology, Culliton argued the State had a role to play in ensuring we adopted the new technologies and in promoting R&D.

The report argued for State involvement on the basis that R&D benefited not only individual firms & but the community at large.

After IDA Ireland and Forbairt were formed, the Technology and Innovation Advisory Council argued the need for greater commitment to R&D in Ireland within the context of a national approach to science, technology and innovation.

Eoin O’Malley, a researcher with the Economic and Social Research Institute (ESRI) who has written extensively on economic policy and strategy, believes Culliton was a success.

“No matter what measure is used to track the economy since Culliton we are doing well by international standards,” he said.

& The report also sought to encourage the growth of Irish-owned businesses to ensure the economy had a strong base developed in tandem with the growing list of foreign multinationals moving in, particularly from the US.

On the R&D side, where much has been made of the fact that Ireland spends nearly half the amount spent in other European countries, O’Malley argues it is not a true picture.

In his opinion, the mix of Irish firms has been less reliant on intense R&D than firms in Germany, France or Britain.

Even if Culliton cannot be credited for all that has happened in the economy since the report was published, it certainly came on the cusp of a new surge in Irish economic activity.

We have witnessed a more favourable economic environment, underpinned by proper fiscal management and an increasingly favourable corporate and personal taxation regime.

Like Telesis before it, Culliton stressed the need to promote indigenous Irish firms. Better to die on your feet than live on your knees was the message.

Culliton suggested there was too much inward investment at the expense of home-spun companies.

Danny McCoy, senior economist at the ESRI, expects that what Culliton began, the latest report will re-emphasise.

In that sense Mr McCoy said, moving up the value-added chain in an indigenous Irish company context was still a big issue.

“Our vulnerability in that context was highlighted two years ago when the multinationals here transferred a high amount of the wealth generated here to their home base.”

“We have to ensure that in future the gap between GDP and GNP is narrowed. The only way to do that is by creating more added value in goods produced by indigenous Irish firms.”

That need not be done here, he said. It can be done in subsidiaries of Irish firms overseas, “but it is an issue, that, despite the success of Culliton, still needs to be addressed”. “In that context I see much greater focus on the role of Enterprise Ireland over the IDA in the next 10 years of our economic development,” said Mr McCoy.